$WTW bears triple money

Downside option positions paid off again today as Weight Watchers continues to slide.

On Feb. 8, Investitute’s proprietary programs cited the purchase of 5,400 March $30 puts for $3.60 to $4.10 with shares at $28.90. This was clearly fresh buying, as volume was well above the strike’s open interest of 1,055 contracts before that session began.

Those puts traded for as much as $10.51 today, about 3 times their initial purchase price. The stock dropped 32.63% a large move but nowhere near that of its options on a relative basis.

Long puts lock in the price where a stock can be sold no matter how far it might drop, gaining value in a selloff with the potential for significant leverage. The contracts can be purchased either as an outright bearish bet or a hedge on a long-stock position.

It is the second winning trade in the name posted on Investitute in barely a week.

WTW dropped 6.49% to $19.44 today. The stock has fallen sharply since the weight-loss company announced a disappointing outlook on Feb. 26.